Burnham Institute president receives conflict warning

Group claimed state stem cell institute board member violated law

The state Fair Political Practices Commission sent a warning letter to Burnham Institute President John Reed after investigating a complaint that he violated conflict-of-interest law.

Reed, who is also a board member for the state stem cell institute, was investigated after he sent an appeal letter to its staff last year when it decided the Burnham Institute was not eligible for a particular research grant. The letter did not prompt the stem cell institute's staff to change its decision.

But the nonprofit Consumer Watchdog organization complained to the commission that Reed's action violated state conflict-of-interest law. State Controller John Chiang also asked the FPPC to investigate.

“Although this matter raises ethical concerns, we are closing this matter with a warning letter,” the FPPC said in a letter to Reed's lawyer.

The letter advised Reed that failure to comply with conflict-of-interest law can result in an enforcement action against him, including penalties of up to $5,000 for each violation.

The letter resolved a dispute that prompted Reed to recuse himself from all meetings and decisions of the stem cell institute for the past year.

“I filed the complaint more than a year ago to ensure that the (stem cell institute's board) maintains the highest ethical standards,” said John Simpson, of Consumer Watchdog, based in Santa Monica. “I hope Dr. Reed and all members of the board have learned from this. Assuming they have, Dr. Reed can now return to the ICOC after more than a year's absence and make a positive contribution to the board.”

Reed sent a six-page letter to the stem cell institute's staff after it decided that Burnham did not qualify for a grant because the principal investigator applying for the funding is not a full-time staffer at the institute. Robert Klein, chairman of the stem cell institute, had recommended that Reed send the letter.

Reed and Klein have said that, in retrospect, sending the letter was a mistake.

Reed said that at the time he thought it was OK to send the letter because a scientific review committee already had scored the grant application – giving it the second highest score of the applications in that round.

The board also had voted to fund the grant. Reed did not participate in that vote.

After the board vote, when the staff was conducting due diligence on grant recipients, it determined the Burnham did not meet the specifications of the grant application.

Reed thought the staff's decision was wrong. He asked Klein what he should do about it. Klein suggested Reed write a letter to the staff.